Which description best matches the chase production strategy?

Which description best matches the chase production strategy?

• A. Adjusts capacity to match demand; hires and lays off workers; finished goods inventory remains constant; works well for make-to-order firms
• B. Maintains constant output; varying inventory
• C. Maintains a stable core workforce while using overtime
• D. Produces with subcontracting only

Answer: (A)

Chase production strategy focuses on making the production rate rise and fall with demand, so capacity is adjusted to match what customers want. This means hiring workers when demand increases and laying them off when it drops, keeping finished goods inventory effectively minimal and stable so you don’t build up stock. It’s especially suitable for make-to-order firms where demand fluctuates and you want to avoid carrying excess inventory; you produce to fulfill actual orders rather than forecasted ones. The other approaches diverge from this idea: keeping output constant and using inventory to absorb demand swings is a level production approach, maintaining a stable core workforce with overtime is a hybrid that doesn’t fully ride the demand curve, and subcontracting-only relies on external capacity rather than adjusting your own workforce.

Chase production strategy focuses on making the production rate rise and fall with demand, so capacity is adjusted to match what customers want. This means hiring workers when demand increases and laying them off when it drops, keeping finished goods inventory effectively minimal and stable so you don’t build up stock. It’s especially suitable for make-to-order firms where demand fluctuates and you want to avoid carrying excess inventory; you produce to fulfill actual orders rather than forecasted ones.

The other approaches diverge from this idea: keeping output constant and using inventory to absorb demand swings is a level production approach, maintaining a stable core workforce with overtime is a hybrid that doesn’t fully ride the demand curve, and subcontracting-only relies on external capacity rather than adjusting your own workforce.